Export and project financing

Transcription

1 Energy Efficiency Made in Germany Initiative Export and project financing Investment strategy for energy efficiency projects in Thailand

2 Thailand s Existing Policy & Measures to support the Energy Efficiency Improvement Mainly focused on the Financial Support & Voluntary Program The Department of Alternative Energy Development and Efficiency (DEDE) is the government agency responsible for implementing EE under the ENCON Act.

3 Energy Efficiency Incentives Support the high efficiency technology investment Revolving Fund ESCO Fund Tax Privilege Demonstration & Dissemination of the NEW Technology The incentive from reduction of the energy consumption Demand Side Management by Bidding Mechanism (DSM Bidding) Capacity Building Human Resource Development & Training Provide Benchmarking Information Regulation & High efficiency Label Normally, The Government will revise the detail & condition of the supporting policy every year.

4 Energy Service Company (ESCO) Company or Organization that facilitate or support the Energy Conservation Projects for the Energy Users (Industrial Manufacturers & Commercial Buildings) Energy Efficiency Improvement Projects Renewable Energy Development Projects The scope & functions to drive the Energy Efficiency Projects Provide the consultancy on the Technologies Selection Provide the Financial Support or facilitate the user to get the financial support from the financial Institution Execute & Manage the Projects Perform the Energy Audit, Measurement & Verify the Energy Saving from Project Installation Guarantee the Energy Saving

5 Thailand Energy Efficiency Revolving Fund Established in 2003 to stimulate and leverage commercial financing for EE projects, and to help commercial banks develop streamlined procedures for project appraisal and loan disbursement. The fund provides capital to Thai banks to fund EE projects, and the banks provide low-interest loans to EE projects in industries and buildings. 11 commercial banks. The source of the funds is from the ENCON fund which created under Thailand s Energy Conservation Promotion Act. The fund was initially structured for a three-year period and has been extended twice. Phase III of this program had completed at the end of

6 Thailand Energy Efficiency Revolving Fund (EERF) 11 local financial institutions Max. interest rate: 4% Max. loan period: 7 years Results from Phase II: Reduce oil imports of over 400 million liters/yr. Reduce power demand over 200 MW Each bank was provided a credit line in the range of THB 100 to 400 million (about USD 2.5 to 10 million) at zero interest rate. The banks were allowed to charge an interest rate of up to 4% to cover their management and administration costs and risk coverage.

7 Energy Efficiency Improvement by using EERF Loan The eligible projects (EE measures) are as defined in Thailand s Energy Conservation Promotion Act. (ENCON Act) No minimum level of energy savings is applied. EERF loans may be used for purchase and installation of equipment; engineering design and supervision fees, and any savings guarantee fee payable to an ESCO The cost of works necessary for installing and operating equipment, such as equipment foundations, gas pipelines, etc.; and transportation costs, demolition costs, import taxes and duty and any value-added tax associated with these costs.

8 Energy Efficiency Improvement by using EERF Loan For industrial Sector, the scope of activities include the improvement in combustion efficiency of fuels; prevention of energy loss; recycling of energy wastes; substitution of one type of energy by another; more efficient use of electricity through improvements in power factors, reduction of maximum power demand during peak demand, use of appropriate equipment and other approaches; and use of EE machinery or equipment as well as use of operation control systems and materials that contribute to energy conservation.

9 The process & steps to get the loans under the EERF Identification of EE project eligible for loan ESCO or other energy services provider Financial analysis of the project The bank DEDE assessment DEDE Bank approval of loan The bank Project implementation The borrower Loan repayment The borrower Each participating banks use their credit evaluation and project appraisal criteria to evaluate the loans. Loan applications are assessed mainly on the basis of the project proponent s balance sheet and assets, rather than on the cash flows and savings from the EE project itself Therefore, the loans are asset based, rather than project-based, lending.

10 Thailand Energy Efficiency Revolving Fund (EERF) Very few ESCO projects were financed (only three in Phases I and II combined), because most of the ESCOs in Thailand have limited financial capacity and weak balance sheets. Thailand, subsequently, has created an ESCO fund to address the need for financing ESCO projects.

11 ESCO Fund Aim to encourage private investments in renewable energy and energy efficiency projects which are viable, but seek for project finance Fund Manager 1. Energy for Environment Foundation (500 Million Baht) Energy Conservation Promotion Fund ESCO Fund Investment Committee 1,000 M Baht The ESCO Fund is a grant from DEDE which now 1,000 million Baht and had planed to expand to 2,000 million Baht 2. The Energy Conservation Foundation of Thailand (ECFT) (500 Million Baht) ESCO Venture Capital Equity Investment Equipment Leasing Carbon Credit Market Technical Assistance Credit Guarantee Facility Note: Fund Manager is a non-profit organization and has been appointed by DEDE.

12 The Objectives of the ESCO Fund To stimulate more than 1,250 million baht investments in renewable energy and energy efficiency. To encourage more than 10 ktoe annual energy saving or valuing 250 million baht per year. To promote and support private investments through Energy Service Company (ESCO). To assist entrepreneurs in minimizing their energy cost, and achieving revenues from carbon credit To provide financing to energy efficiency and renewable energy businesses.

13 The Mechanisms of ESCO Fund in Thailand

14 The Status of ESCO Fund in Thailand 39 Projects had been supported The total financial support by ESCO Fund Million Baht The Total Investment in Energy Efficiency Projects & Renewable Energy Projects 5, Million Baht Energy Saving Million Baht/year ( ktoe/year)

15 The Status of ESCO Fund in Thailand Detail Germany Thailand Number of ESCO Investment (Million Thai Baht) 6, Ref:

16 The Example of ESCOs in Thailand 1. Elco Power Systems Ltd 2. Solatron Public Co. Ltd. 3. Chamnankij Engineering Co.Ltd. 4. Energy Conservation System (Thailand) Co.Ltd. 5. Metropolitan Electricity Authority of Thailand (MEA) 6. Electricity Generating Authority of Thailand (EGAT) 7. Cos Motor (Thailand) Co.Ltd. 8. Summit Manufacturing Co.Ltd. 9. Siemens (Thailand) Co.Ltd. 10. CHCL Energy and Environment Management (Thailand) Co.Ltd. 11. DMGT Co.Ltd. 12. Team Energy Management (Thailand) Co.Ltd. Totally There re 45 ESCOs in Thailand. For more details see in

17 Tax Privileges Thailand s Board of Investment (BOI) s tax incentives for energy efficiency (& renewable energy) projects: Corporate income tax holidays up to 8 yrs. Additional 50% reductions of corporate income tax for 5 yrs Import duty reductions or exemptions on equipment and raw materials Double deduction of public utility costs Deductions for infrastructure construction/installation costs Note: Projects must be submitted by end of 2012.

18 Tax Privileges Limitations Limited for the Renewable Energy Projects Biomass Biogas Wind Energy Limited to 19 high energy efficiency Products, announced by DEDE Air Conditioner Electrical Appliances Etc.

19 Demand Side Management by Bidding Mechanism Provide financial support to encourage business operators to invest in higher energy efficiency machines/equipment. Subsidy is based on actual units of energy saving achieved in a year. (subsidy = annual energy saving x subsidy rate (as bid by each company)) Max. subsidy rate for Energy each Type energy type is shown in Maximum the table: Subsidy Rate Electricity 1 Baht/kWh Heat from liquid and gas fuels e.g. fuel oil, LPG, natural gas, etc. Heat from solid fuels e.g. coal, wood, rice husks, sawdust, bagasses and other agricultural waste 75 Baht/MMBtu 15 Baht/MMBtu MMBTU = Million British Thermal Unit = 1,055 MJ Company requesting lower weighted subsidy rate will be subsidized first, i.e. bidding mechanism. Therefore, this program will result in higher energy saving to subsidy ratio.

20 Financial Support to facilitate the Energy Efficiency Improvement (Demonstration & Dissemination of the NEW Technology) Development and Efficiency (DEDE) had supported the investment on NEW equipments & technology that have the high energy efficiency and can reduce the energy consumption. (support the Demonstration & Dissemination) The Financial Support is up to 50% of the Investment. (up to the supporting policy each year) but limited to 7,000,000 Baht (1 EUR = 40 Baht) In 2010, KST had been supported 7,000,000 baht on the regenerative burner investment. Regenerative burner is heat recovery technique which can reduce heat loss from exhaust gas. By employing regenerative burner in reheating furnace one can reduce over 20% of fuel consumption, equally approximately 37.2 liter/ton.

21 Mr. Nattapon Ratanamalee Researcher (Metallurgical Engineer), Industrial Solution Service Division Manager Tel +66 (0) ext 260, HP: +66 (0)

22 Thanks for your kind Attention 22